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5 Imperatives of Effective Supplier Quality Management
Fewer than 1 out of every 5 businesses has an effective supplier quality management strategy, according to LNS Research. And more so, those that do have an effective strategy, have a 16 percent lower cost of poor quality (COPQ).1
In addition to increasing costs, poor supplier quality management has the potential to introduce substandard products into the supply chain. This can lead to post-market patient/customer injury, damage to the brand, and regulatory attention.
Given the complexities of organizations today, there are multiple points of interactions between them and their suppliers, from product development to manufacturing and distribution to their end customers. These interactions are critical to delivering on the key business imperatives as well as maintaining the health of an organization. Risks that emerge and evolve would need to be understood as well as controls put in place to manage/ mitigate those risks. Anticipating disruptions to the supply chain is key to driving efficiency in the value chain.
Key Areas to focus on to improve SQM
A critical task when it comes to managing supplier quality is document management. A breakdown in this area can lead to costly outcomes. A digital quality management system (QMS) is crucial to bringing all of the key documents together including certifications, specifications, supplier quality agreements, and supplier corrective action requests (SCAR).
Having all of a supplier’s documentation in one system, versus in multiple systems, allows for a quick viewing of documents / information and enables faster decision making. This allows the organization to immediately establish whether suppliers meet company standards and other agreed upon specifications. Having them all in one place and enabling controlled access to the QMS can help prevent versioning inaccuracies and delays that are commonplace with documents shared via email.
Supplier quality agreements allow the organization to develop clear expectations and key performance indicators (KPIs) for the supplier. Having these agreements linked to the supplier record enables the tracking of supplier compliance and also allows the quality function to refer back to these documents when communicating with suppliers.
Managing SCARs in the QMS allows for the tracking of communications so that the quality team doesn’t have to sort through email threads that might be outdated. The entire team can effortlessly see tasks, status, and future steps. 1
Conduct Supplier Audits
An effective and proactive way to ensure supplier quality control is through a Supplier Audit. Doing this periodically assists in verifying that supplier’s practices align with the organizations purchasing requirements.
These audits can be used to ensure the suppliers have comprehensive quality, compliance and safety programs in place. This auditing process to quality check the supplier against non-conformances should cover manufacturing, quality, service provisioning, and compliance. These audits can detect areas for improvement and assist organizations to determine corrective actions, response and resolution processes.
A risk-based approach to auditing suppliers will ensure that the high risk suppliers are monitored closely. Monitoring the results of the supplier audits and using the data to proactively reduce risks across similar suppliers as well as improve the audit process itself is critical for organizations to manage their suppliers effectively. Using previous audit results to drive and define the scope of future audits is also beneficial to decrease the load on the audit group as well as focus on suppliers that present more risks.
Incorporate supplier scorecards
Incorporating standardized scorecards into the supplier management process will provide a way to rate suppliers on performance and also benchmark one supplier versus another. Suppliers’ KPIs, non-conformance, and hazards can all be measured using scorecards. Analytics on these KPIs can help with tracking quality improvements or failures over time, identifying areas for improvement, and agreeing on corrective actions to reduce quality risks in the future.
Using the power of analytics to gain more insights into the findings as well as using the data effectively to make decisions on the health of suppliers is critical to effectively managing suppliers. Each of the metrics can be weighted based on risk factors and then combined to provide an overall score. Setting approval criteria allows the QMS to display the score as green (approved), yellow (warning), or red (not approved) for data-driven supplier selection.
The supplier scorecard also enables the organization to run trends and analysis on the supplier performance data to help identify issues that need to be resolved. Additionally, the data can be used in developing leading indicators that provide a warning of potential quality issues.
Integrate IT processes
Having an integrated enterprise solution can enable better communications, collaboration and quality control across the supply chain from procurement to delivery. Separate financial, quality, and operational systems that are not integrated cause disparities in information which in turn can lead to inaccurate data and decisions and quality issues.
Introduce a cost recovery system
A cost recovery procedure helps improve supply chain accountability. It may enable you to recoup the expense of poor quality from a supplier, as well as push them to investigate and resolve issues that cause poor quality as promptly as possible. Using analytics to capture trends as well as the costs associated with certain non-conformances or risks for suppliers will help organizations make informed and proactive decisions.
Supplier Quality Management is one of the most important areas to consider when looking at controlling the overall cost of quality in an organization. Leveraging experienced people both internal and external along with the right processes and technology is critical.
There are important ways to ensure that you have an effective supplier quality management process, as we’ve discussed. One of these ways is through centralizing documentation so that information is in one place and easily accessible. Another is to perform timely audits of your vendors to ensure they have a comprehensive safety and quality program in place. This will enable your organization to detect areas for improvement and assist suppliers in determining corrective actions, response and resolution processes.
Additionally, it is important to ensure from the beginning that the organization partners with suppliers who can meet and exceed expectations. In order to do this, having qualification steps to rate the suppliers relative to the standards of your organization is imperative. Also having supplier scorecards to rate the suppliers as you proceed forward with them as partners and to keep track of trends and deviations from the norm to control the quality and detect situations before they become significant.
Why It Matters to You
Supplier Quality Management is an important area to consider given the impact it has on the organization from both a positive and negative perspective. Many Life Sciences organizations rely heavily on their supply chain partners to produce and move product to the consumer that are safe and effective. This article provides the key imperatives to help ensure effective supplier quality. The key take-aways are:
- How to better control your documentation to ensure optimal access and a lower cost of quality.
- Understanding why an audit and supplier quality approval are both important to ensure optimal quality.
- What supplier scorecards can provide to your organization to optimize quality.
- Why an integrated enterprise system is an imperative to supplier quality management.
For over 25 years, Astrix has been a market-leader in dedicated digital transformation & dedicated staffing services for science-based businesses. Through our proven laboratory informatics, digital quality & compliance, and scientific staffing services we deliver the highly specialized people, processes, and technology to fundamentally transform how science-based businesses operate. Astrix was founded by scientists to solve the unique challenges which science-based businesses face in the laboratory and beyond. We’re dedicated to helping our clients speed & improve scientific outcomes to help people everywhere.